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Chapter 4 - Moving Forward on the Priorities of Canadians -
The Importance of Canada's Relationship to the World

Highlights

• An additional $250 million over two years to cover the costs of Canada’s participation in peacekeeping missions in Afghanistan and the fight against terrorism.

• An additional $50 million for Canada’s participation in the peacekeeping force in Haiti.

• Exemption from tax of the income earned by Canadian Forces personnel and police while serving on high-risk international missions.

• An additional $605 million over five years for the security contingency reserve.

• A reduction in the Air Travellers Security Charge.

• Building on the 8-per-cent increase for 2004–05, an additional $248 million for international assistance, or an 8-per-cent increase, for 2005–06.

Introduction

The world has changed since Canada’s last review of its international policies a decade ago. So, too, has Canada’s relationship to the world.

The United States plays a greater role in the world. China, India, Brazil and other emerging economies are now important global players. Globalization has advanced dramatically, although not all parts of the world have benefited equally. New security threats have emerged. Restoring stability and aiding reconstruction in post-conflict states such as Afghanistan and Iraq has become more pressing.

Within the international system, new institutions and processes such as the Group of Twenty (G-20), which brings together important emerging economies with Group of Seven (G-7) countries, have emerged to address new needs, and existing multilateral institutions including the United Nations (UN), the North Atlantic Treaty Organization (NATO), the International Monetary Fund (IMF) and the World Bank are re-examining their approaches.

Canada must also adjust to this changing world. The Government has launched the International Policy Review, an integrated review to reassess our foreign policy objectives, trade and investment needs, defence requirements and international assistance.

Defence

Canada’s current defence policy objectives were established in the Defence White Paper published in 1994. In the late 1990s, however, it became apparent that sustaining this defence policy would require additional resources.

The Government increased defence resources in Budget 2000, Budget 2001 and Budget 2003. In particular, the $800-million annual funding increase introduced in 2003, as well as efficiency measures introduced by the department, have enabled the Department of National Defence to move towards operational sustainability in the short term.

As Canada conducts its International Policy Review and develops a new national security policy, long-term financial resource requirements will be considered as part of the review of defence strategy and associated Canadian Forces’ capacity. Rebuilding Canada’s military on old models will not suffice. Canada’s defence objectives and capabilities must match our foreign policy goals, as well as our defence and security obligations and objectives. It will also be important to recognize the need for much closer cooperation among the many agencies and departments of government that are engaged in fighting global terrorism.

Canada has a proud history of responding to threats to global security and contributing to peacekeeping efforts around the globe. In addition to significant contributions in Eastern Europe, the Canadian Forces have been very active in Afghanistan since 2001. Initially, the Canadian Forces participated in the coalition against terrorism through the now-completed Operation Apollo. They are currently involved in Operation Athena, playing a leadership role in the NATO-led mission to maintain peace and security in Afghanistan.

The Prime Minister recently extended Operation Athena for another year at a lower level of participation. In addition to that mission, Canada will participate in Operation Altair, the continuing Canadian Forces contribution to the coalition against terrorism in Afghanistan. Budget 2004 provides $195 million in 2004–05 and $55 million in 2005–06 to cover the incremental costs of these missions.

On March 5, 2004, Canada announced that it would participate in the multinational effort to create a secure environment and pursue a constitutional process to restore democratic governance in Haiti. As a first step, 450 Canadian Forces personnel and six helicopters are taking part in the United Nations Multinational Interim Force to assist in stabilizing the situation in that country. This budget provides $50 million in 2004–05 to cover incremental costs of that three-month commitment.

As well, the Government will provide the additional resources required to cover the incremental costs of any future out-of-country new deployments of Canada’s military.

Tax Relief for Canadian Forces Personnel and Police Deployed to International High-Risk Operational Missions

Canada’s military and police serving on international missions provide testimony to Canada’s commitment to world peace and stability. They serve on important missions around the globe, working in partnership with the United Nations and our NATO allies. Our commitment is long-standing—for example, since 1947 the Canadian Forces have completed 72 different international operations.

This budget provides special recognition for Canadian Forces personnel and police serving their country on high-risk international operational missions. Starting January 1, 2004, the employment income that these individuals earn while deployed to these missions will be exempt from income tax. This tax relief will apply on income up to the highest level of pay earned by a non-commissioned member of the Canadian Forces.

This measure will cost an estimated $30 million annually.

D-Day

In addition, the Government recognizes the many sacrifices and contributions that have been made by Canada’s veterans. To help ensure that these contributions are not forgotten, the budget provides $1.5 million for the Juno Beach Centre at Courseulles-sur-Mer in Normandy to commemorate the 60th anniversary of the landing of Canadian soldiers on D-Day in June 1944.

Planned Capital Spending

National Defence has an ongoing capital plan and Strategic Capability Investment Plan, aimed at ensuring the best equipment possible for Canada’s military. Major projects currently underway include upgrading Canada’s Aurora long-range patrol aircraft and the CF-18 fighter jets, as well as replacing the aging armoured personnel carrier fleet with Canada’s state-of-the-art Coyote vehicles.

The Speech from the Throne emphasized the Government’s commitment to provide the Canadian Forces with the equipment and training needed to fulfil their important and difficult duties. As part of the multi-year capital budget of National Defence, the following major capital acquisitions are underway to refurbish the Canadian Forces:

• The Maritime Helicopter Project, which will deliver 28 maritime helicopters that will meet Canadian Forces’ needs well into the 21st century.

• Eight hundred new Mercedes G-wagons, 60 of which will replace Iltis vehicles already in combat. These new vehicles provide the Canadian Forces with enhanced carrying capacity, mobility and protection.

• Tactical Unmanned Arial Vehicles and Counter Bombardment Radars, already in use by Canadian troops in Afghanistan.

• The acquisition of 66 Mobile Gun Systems to replace its aging Leopard tank fleet.

Another major priority for Canada’s military is the purchase of modern Fixed Wing Search and Rescue aircraft (SAR) to replace older Hercules aircraft and Canada’s fleet of Buffalo aircraft. Under Defence’s current plan, deliveries of the new aircraft will begin much later in the decade. This budget sets aside non-budgetary resources to allow the Department of National Defence to move this acquisition forward in time without displacing other planned capital investments. By doing so, the Government will accelerate the process so that deliveries of the replacement SAR planes to Canada’s military can begin within 12 to 18 months. This measure will allow Defence to spend an additional $300 million on capital in 2005–06 and similar amounts in subsequent years until this procurement is completed.

Other major acquisitions consistent with the current capital budget include replacements for the navy’s replenishment ships that will be capable of supporting naval task forces at sea as well as providing other capabilities such as sea-lift of Canadian Forces en route to missions. Final decisions will await the results of the International Policy Review.

Security

Since September 11, 2001, the Government has taken important steps to strengthen national security. This has involved actions on many fronts, including securing Canada’s borders and improving air and marine security. In the coming months, the Government will be issuing Canada’s first National Security Policy, which will lay out a blueprint for action to address threats to our collective security.

On December 12, 2003, the Government announced important organizational changes, including the new Department of Public Safety and Emergency Preparedness. This new department includes national security, crisis management, emergency preparedness, border functions, corrections, policing and crime prevention. The Government also announced the creation of the new Canada Public Health Agency to address public health risks and to work with the provinces and territories in responding to public health crises. The new position of National Security Advisor to the Prime Minister was created to ensure cooperation between agencies and the development and implementation of an effective national security policy.

Budget 2001 allocated $7.7 billion over five years to security-related initiatives in areas such as intelligence and policing, screening of new entrants to Canada, emergency preparedness and response, and a new approach to air security.

Budget 2001 also created a security contingency reserve of $345 million over five years to respond to future security needs that could not be anticipated at the time of the budget. Budget 2003 provided additional funds of $75 million over two years for the security contingency reserve as a further response to security needs, including those under the Smart Border Action Plan.

To continue to meet current needs and provide for new security priorities, Budget 2004 provides an additional $605 million over five years to the security contingency reserve. These funds will be used to address security priorities such as intelligence, border protection, marine and cyber security, and enhanced coordination of systems, information, threat assessments and emergency response.

Smart Borders

The Government is committed to the Smart Border Action Plan which is strengthening North American security while improving the flow of travellers and commerce.

Since signing the Canada-U.S. Smart Border Declaration on December 12, 2001, the Government has made significant investments in border security. Budget 2001 allocated $1.2 billion over five years to strengthen border security and improve border infrastructure. Since Budget 2003, a further $286 million has been allocated from the security contingency reserve for the development and implementation of key border management programs such as:

• The Free and Secure Trade (FAST) program for the expedited movement of low-risk goods, which is now available at 12 high-volume border crossings.

• The NEXUS program for the expedited movement of people, which is currently operational at 11 border locations and will be expanded to two new locations.

• The Integrated Border Enforcement Teams (IBETs), which are now operational in all 14 IBET regions along the border.

The new Canada Border Services Agency, under the Department of Public Safety and Emergency Preparedness, intends to bring together all border-related activities within the Government to ensure a more cohesive approach to meeting border security and trade objectives.

Building on the success of the Smart Border Action Plan, Canada, the United States and Mexico will continue to cooperate on new border and security priorities. Secure and efficient borders are crucial to Canada’s economy as well as the economies of our North American trade partners.

In 2003 the Government continued to make strategic investments in border infrastructure, particularly through the $600-million Border Infrastructure Fund. These new investments are spread across Canada—New Brunswick, southern Ontario, Saskatchewan and British Columbia—and are in addition to the $150-million commitment made in 2002 towards the Windsor Gateway. In total, about $450 million of the funding available from the Border Infrastructure Fund has now been committed towards specific projects.

Air Security

The Government committed $2.2 billion of the $7.7 billion allotted for security initiatives in Budget 2001 to an enhanced air travel security system and created the Canadian Air Transport Security Authority (CATSA).

A Crown corporation, CATSA reports to Parliament through the Minister of Transport. CATSA is responsible for the delivery of consistent, effective and professional services that meet or exceed Transport Canada standards, including:

• Pre-board screening of passengers and their belongings.

• Acquisition, deployment and operation of explosives detection systems.

• Implementation of the Canadian Air Carrier Protective Program.

• Implementation of a restricted area identification card.

• Screening of non-passengers entering airport restricted areas.

• Contributions for supplemental airport policing services.

To fund the enhanced air travel security system, the Government established the Air Travellers Security Charge at a level sufficient to recover planned expenditures through 2006–07. The Government committed to review the charge over time to ensure revenue remains in line with expenditures. The first review, set out in Budget 2003, reduced the charge for air travel within Canada to $7 from $12 for one-way travel and to $14 from $24 for round-trip travel.

Based on updated revenue and expenditure projections, this budget proposes to reduce the charge for air travel within Canada to $6 for one-way travel and to $12 for round-trip travel. For transborder air travel, the charge will be reduced to $10 and, for other international air travel, the charge will be reduced to $20.

Additional details concerning the review are provided in Annex 5, "The Air Travellers Security Charge."

International Assistance

Despite greater prosperity in many emerging economies, serious development challenges remain in most of the poorest countries and regions of the world. Canada must maintain its commitment to developing nations and those recovering from conflict by continuing to provide much-needed international assistance.

This budget builds upon the 8-per-cent increase in international assistance already provided for 2004–05 in the 2003 budget, by providing an additional $248 million, or an 8-per-cent increase, for 2005–06.

Canada will continue its commitment made at the 2002 Kananaskis Summit to devote at least half of all international assistance increases to Africa. The Government is also proceeding with legislation to provide anti-HIV/AIDS drugs, as well as other drugs, at low cost to African countries. This will help make medical treatment more accessible to the estimated 30 million people currently suffering from HIV/AIDS in Africa.

Canada will continue to provide leadership on the issue of debt forgiveness for the world’s poorest countries, particularly in Africa. In 2004 the Government will add Rwanda and the Democratic Republic of the Congo to the list of countries benefiting from Canada’s debt moratorium. This action will build on relief already provided by the Heavily Indebted Poor Countries (HIPC) Initiative and impose an immediate debt service moratorium on all debt owed to Canada by these countries, i.e. $3.3 million and $45.5 million respectively. Canada will also cancel the $1.8-million debt owed by Guyana along with other debts owed by eligible countries under the Canadian Debt Initiative as they complete the HIPC process.

International assistance also involves helping countries and regions torn apart by conflict. In Afghanistan and Iraq, Canada is playing its part in alleviating suffering and rebuilding these countries to enable them to become free, stable and prosperous.

Canada announced its commitment to provide debt relief on the vast majority of Iraq’s debt to Canada, which stands at approximately $750 million. This is in addition to Canada’s contribution of up to $300 million in humanitarian and reconstruction efforts in Iraq. Canada’s actions on Iraqi debt will be undertaken in cooperation with other creditors through the Paris Club, an international group of creditor governments from industrialized countries that works with debtor nations on debt restructuring.

Canada will also expand its reconstruction and humanitarian assistance in Afghanistan by $250 million over five years from the International Assistance Envelope beginning in 2004–05. With this increase, Canada’s aid to Afghanistan since September 11, 2001, will have totalled over $616 million.

Canada Corps

Canada is increasingly looked to by the developing world to provide expertise, knowledge and support on good governance which reflect Canadian values. A variety of governmental, non-governmental and private sector organizations across Canada have arisen or adapted to meet this growing demand.

To provide a focal point to more effectively match the skills and talents of governments, community groups and all Canadians with communities that need them in developing countries, the Government will establish the Canada Corps. It will provide enhanced opportunities for young Canadians—students and recent graduates—to participate in these governance initiatives so that they can learn about the world as they contribute to it. The goal is to provide new opportunities for Canadians, and for Canada to be a leading voice in the world for democracy, pluralism, human rights and the rule of law. This budget invests $15 million over the next two years to support the Canada Corps initiative.

Table 4.9
The Importance of Canada’s Relationship to the World

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